Amazon vs New York. You better pray Amazon wins this one.
The state of New York just passed a bill that could cause no end of grief to marketers who use affiliates to promote products. Amazon is challenging the bill as unconstitutional, and New York based affiliate marketers should be on their knees praying Amazon wins.
In most states, a company only has to collect taxes if they have a physical presence in the state.
New York has passed legislation re-defining physical presence to mean a company has a physical presence if it has even a single affiliate based in the state, or if a New York based site “earns a referral fee for sending customers to an online retailer.” Think Google Adwords on the New York Times?
If Amazon.com fails to defeat the state, it isn’t far fetched to suggest that Amazon might cut off all New York affiliates rather than lose sales by effectively raising prices for all the customers in that well-populated state.
And if Amazon.com does lose, look to other states to follow with a tax grab of their own, making Affiliate programs a lot less appealing for a lot of larger companies that currently run them.
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May 4th, 2008 at 9:30 am
If this sort of laws do get passed, it certainly has a huge impact on affiliate marketing programs that’s for sure.
I guess with the power of the internet and technological advancements, the law is starting to catch up so it can also have a share of what’s been happening in the world wide web.
May 4th, 2008 at 10:08 pm
This lawsuit doesn’t surprise me. I figured eventually the govt’ would want to add sales tax to all sales, even those across states.
May 8th, 2008 at 11:15 am
Hopefully this law won’t get passed or at least it will be tied up it litigation for a very long time.
Americans are sick and tired of being taxed to death for every little thing, even garage sales! It has been said that we have a tax rate at twice that of the time of Boston Tea Party. That’s why I am all for a flat tax. Abolish every other tax and only have a usage tax. If you don’t want to pay the tax don’t buy the item. Maybe then the politician will stop spending money on cherry wood desks and luxury car leases with our hard earned money.
Regardless of what happens with this legal battle. People will find a way around it. no matter what.